Long‐Term Care and the Housing Market

21 Pages Posted: 3 Oct 2012

See all articles by David N.F. Bell

David N.F. Bell

University of Stirling - Department of Economics; IZA Institute of Labor Economics

Alasdair Rutherford

University of Stirling

Date Written: November 2012

Abstract

This study examines the combined effects of population ageing and changes in long‐term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings, which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long‐term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.

Suggested Citation

Bell, David N.F. and Rutherford, Alasdair, Long‐Term Care and the Housing Market (November 2012). Scottish Journal of Political Economy, Vol. 59, Issue 5, pp. 543-563, 2012. Available at SSRN: https://ssrn.com/abstract=2156094 or http://dx.doi.org/10.1111/j.1467-9485.2012.00594.x

David N.F. Bell

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom
+44 1786 467 486 (Phone)
+44 1786 467 469 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alasdair Rutherford

University of Stirling ( email )

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